How to Apply For Credit Card Under Self-Employed Category?

There was a time when working a 9-5 job was highly respected. However, with changing times, more people are opting to work as self-employed individuals. They either start a business or work as freelance professionals to earn a livelihood. Greater control and autonomy and changing attitudes towards work drive people to become self-employed. The banks have also recognised this category of individuals and launched a special category of credit cards designed specifically for the self-employed. In this article, let’s explore the eligibility criteria and how to apply for a credit card for the self-employed category.

Eligibility Criteria

To apply for a credit card, one must be eligible. The following are the eligibility criteria for self-employed individuals to apply for a credit card.

• Age: Self-employed individuals applying for a credit card should be at least 25 years old. The maximum age limit for self-employed individuals to apply for a credit card is 65 years.
• Credit score: To be able to apply for a credit card, it is important to maintain a credit score of 750 or above.
• Credit history: A long credit history is important for self-employed individuals. This is because only individuals with a good and long credit history can be trusted with high credit limits and big loans. One way to build a good credit history is to ensure you repay your dues on time and never miss out on a payment. Only if you have a good credit history will your application be eligible. Moreover, the banks will also have the confidence that you have financial discipline.
• Income: Self-employed individuals must ensure they have a certain minimum income as specified by the bank to apply for credit cards. Banks usually check whether you are earning a certain level of income to repay your loans. Different banks have different minimum income levels, and you must check your bank’s criteria before applying for a credit card.  

Documents Required by Self-Employed Individuals to Apply for a Credit Card

Once you meet the eligibility criteria, you must keep the following documents ready to apply for a credit card.

Passport size photographs

• Identity proof: Any government ID is considered valid identity proof. Banks accept PAN Card, Aadhar Card, Driver’s License, Voter ID or Passport as valid ID proof.
• Address proof: Aadhar Card, utility bills and Passport are considered valid address proof.
• Income proof: A valid proof of income for a self-employed individual is Form-16, Income Tax Returns, certified financial documents, and proof of business continuity,
• Bank statements: As a self-employed individual, you must also provide six months of bank statements.

How to Apply for a Credit Card for Self-Employed Individuals?

To apply for credit as a self-employed individual, you must follow the steps below.

• Shortlist the card: There are so many credit cards in the market for self-employed individuals, and you must select the card that will suit your requirements.
• Check the eligibility: Each credit card has different eligibility criteria. Ensure you check and qualify for the eligibility criteria of the credit card you selected.
• Keep the documents ready: Once you meet the eligibility criteria, prepare all necessary documents. Banks always specify the documents they need on their website.
• Fill out the application form: You can visit the nearest branch of the bank or fill out the application form for the credit card online. Make sure you input all the necessary information correctly.
• Submit the application: Once you fill out the application, submit it along with the documents. In the case of an online application, you can upload the documents. If you are physically submitting the application, attach a copy of all the documents.
• Wait for the bank’s approval: Once you submit the documents, banks usually take a couple of days to review your application and make a decision. They will communicate their decision through email and text messages.

Benefits of Self-Employed Credit Cards

Having a self-employed credit card offers the following benefits.

• Build credit score: A credit card allows you to build your credit score, positively impacting your business’s creditworthiness.
• Increases business cashflows: Any business needs cashflows for operations. A credit card can help provide the excess cash flow you need to run your business. By using a credit card to make purchases, you will get a grace period to repay your dues without interest.
• Streamlines finances: Having separate credit cards for your business and personal use will help separate your expenses. Moreover, all accounting procedures during tax filing will become easier if you use separate credit cards for business and personal use. 
• Rewards, cashback and perks: Credit cards are designed to offer rewards, cashback, and other perks such as free vouchers, complementary memberships, or airport lounge access. Using a credit card regularly will increase the rewards, which can help reduce your expenses on flights and hotel bookings.
• Keep a tab on expenses: Banks send credit card statements to users on a monthly basis. You can keep track of your expenses and purchases easily using this statement. Alternatively, you can also track the expenses on the bank’s online portal.
• Increased credit limit: Self-employed individuals are usually offered a higher credit limit than standard credit card holders. Hence, they can enjoy the additional credit limit through this category of credit cards.

Features to Check Before Applying for Self-Employed Credit Card

You must look at the following features before applying for a self-employed credit card.

• Joining and annual fee: Credit cards charge a joining fee and an annual fee from the users. Sometimes, the fee is exorbitantly high when compared to the benefits it offers. Hence, it’s better to steer clear of such cards.
• Credit limit: Know the credit limit of the card you are applying for. Sometimes, a few cards do not have a high credit limit. In such cases, your credit utilisation is high, which can affect your credit score. You can always ask the bank what the credit limit is on the card before applying.
• Rewards: Banks market credit cards based on the rewards they offer. You can check the rewards on the bank’s website. Understand and compare the rewards the card is offering with your requirements before selecting a credit card.
• 24*7 customer support: With so many credit card frauds and problems with credit card usage, it is best to opt for a card that provides round-the-clock customer support.
• Card cancellation fee: Credit card issuers usually charge a high cancellation fee to discourage cardholders from cancelling their cards. It is best to avoid such cards.

Some of the Banks Offering Credit Cards for Self-Employed Individuals

The following are some banks and their credit card offerings for self-employed individuals.

Things to Keep in Mind When Applying for Self-Employed Credit Cards

• Maintain a high credit score: It is important to have a high credit score with a good credit history before considering applying for a credit card. This will reduce the chances of your application getting rejected.
• Check the eligibility criteria: Before applying for the credit card, you must check the eligibility criteria. This way, you can ensure your credit card application will not be rejected.
• Do not apply for too many credit cards: Applying for too many credit cards can reduce your creditworthiness. This is because banks will be under the impression that you cannot manage your finances well and rely heavily on credit.
• Fill out the application correctly: You must complete the credit card application with accurate information. Double-check all the details to ensure there is no delay or any other complication during your credit card application process.
• Submit all the relevant documents: Banks need certain documents as proof so they can assess your creditworthiness. If you fail to submit the necessary documents, then your application will not be accepted.
• Check the billing cycle: Before applying for a credit card, it is important to be aware of the billing cycle the banks provide. Since you are applying under the self-employed category, there is a chance that banks can give you a longer billing cycle.
• Be informed of the late payment fees: If you miss out on paying your credit card bills, banks charge a late payment fee. Knowing the late payment fee well in advance is important so you know the consequences of not paying an outstanding bill. Moreover, this will also help you choose a credit card with a lower fee.
• Review the terms and conditions: All credit cards come with a long list of terms and conditions. It is important to review terms regarding the billing cycle, interest rates, late payment fees, and grace period before you apply.

Conclusion

Getting a credit card when you are a self-employed individual can be slightly difficult but not impossible. You will have to give additional documentation, fit into the eligibility criteria, maintain a good credit score, and earn a certain level of income. Doing all this can seem challenging, but it can be very rewarding as these credit cards offer a host of benefits that can elevate your lifestyle and save a lot of money on regular expenses.

Frequently Asked Questions

How do I get a credit card if I am self-employed?

A self-employed individual can apply for a credit card just like any other individual. However, the documentation and effort required are slightly higher than those of regular credit card holders.

What is the minimum salary for a self-employed credit card?

The minimum salary for a self-employed credit card can range between 14 lakhs to 25 lakhs per annum. However, each bank has a certain criterion, and it is best to check with the bank before you apply.

Which bank gives credit cards to the self-employed?

All major banks give credit cards to the self-employed. Some of the banks are SBI, ICICI, HDFC Bank, Axis Bank, Citi Bank, and AU Small Finance Bank.

Do self-employed get loans?

Yes, self-employed individuals can get loans from any bank they choose. The documentation needs are slightly different in this case, but the process is pretty straightforward.

How old should I be to get a credit card under the self-employed category?

The age criteria for self-employed credit cards range between 25 and 65 years of age.

How can I improve my chances of getting a credit card?

You can check the eligibility of the credit card and make sure you fit into the criteria. Then, check for features, fees, and interest rates and choose the card that suits your resources and requirements the best.